China’s soybean crush margins turn negative for first time since August

Soybean crush margins in China have turned negative for the first time since early August, pressured by lower demand for the soymeal they churn out following an outbreak of African swine fever and high domestic bean inventories.

African swine fever, deadly to pigs but not harmful to people, has spread rapidly through China, with more than 70 cases reported across farms since early August. Soymeal is used to make animal feed.

Crushers in the country’s eastern province of Shandong, the hub for soybean processing, are making a loss of 29 yuan ($4.18) a ton compared with a profit of 60 yuan earlier this week, according to data provided by ShanghaiJC Intelligence.

“There are multiple factors at play, demand has gone down because of the swine fever and stocks are high,” said a Singapore-based senior executive at an international trading company.

“Buyers are destocking,” he said, declining to be identified as he was not authorized to speak with media.

Processing margins soared to 315 yuan a ton in September, the highest since December 2016 as buyers snapped up supplies of soymeal on fears of shortages amid the Washington-Beijing trade war. Trade tensions have curbed U.S. soybean exports to China, the world’s biggest buyer.

China’s imports of soybeans are set to drop as African swine fever saps demand for the animal feed ingredient, making it easier for buyers to keep shunning U.S. cargoes amid the trade war.